Today OPEC took the surprise action of slashing crude oil production by 500k barrells per day, claiming that the market is oversupplied.
At the same time the IEA cuts its demand forecast.
All the while the market struggles to defend the $100 per barrell threshhold.
Interesting dynamics, especially if you run around saying drill baby drill.
First a link:
http://www.cnbc.com/...
Proponents of the Drill Baby Drill mantra will now have to shift gears to justifying the need to drill to by claiming we need energy independance. That America cannot be held hostage to the global markets.
The shortsightedness in this lies in that additional oil drilling does not gaurantee that this oil does not feed directly into the same global market that is currently over supplied.
Presently the protection America has from short term shifts in oil production, spikes in prices and geopolitical events lies in the strategic petroeum reserves.
http://en.wikipedia.org/...
The reserve is currently at around 703 milion barrells (from a may source)
http://www.latimes.com/...
This is up from 600 million barrells per day in 2003 prior to the price spikes
http://www.simmonsco-intl.com/...
With demand decreasing, oil prices dropping $40 per barrell even during hurricane season, production being cut and the SPR being essentially fully stocked (one could argue the need to increase the capacity of the reserve) how can a logical person conclude that Drill Baby Drill is anything other than a political ploy and/or a corporate grab of resources to take advantage of high prices.
You can draw your own conclusion over whether or not prices have been manipulated, but i'll remind you that the GOP blocked the Democratic Energy Bill several month ago that imposed restrictions on the ability to manipulate prices and imposed windfall taxes (the same windfall that enabled Alaska to get that famous $1200 check)
http://www.usatoday.com/...